How to retire amid inflation, according to financial advisors

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Reaching retirement with a nest egg that you trust will last is a stressful endeavor even in the best of times.

These days, those nearing the end of their careers also have to contend with historic inflation, stubborn market volatility and the remnants of the coronavirus pandemic.

We asked four of the financial advisors who made CNBC’s FA 100 list in 2022 what they’re hearing from their older clients, and how they’re responding.

Rising interest rates prompt pension concerns

More from FA 100:

Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2022:

For the last 10 years, he said, they’ve seen their pensions mostly rise in value as interest rates have remained at historic lows. Harlemert said the firm has been explaining to clients why their value has gone down a bit, and informed them of all their options to make up for it.

He said pensions can be invested in high-quality government and corporate bonds, and even in stocks.

“We strive to educate clients that even though they are getting a lower lump sum, we can invest in assets that can most likely generate higher rates of return to offset that lower balance,” Harlemert said.

‘Inflation is at the top of mind’

FA Summit: Cramer Lightning Round

Abusaid said his firm has been trying to strike a balance with these goals.

“We came into 2022 with a 10% cash position for most clients, and that has been the wind in our sails,” Abusaid said. “It allows us to calm clients that their essential needs are more than covered for the time being.”

At the same time, he said, the firm makes sure clients, including near retirees, still have plenty of their money in stocks. “This exposure has the benefit to keep pace with inflation long term,” he said.

The pandemic made some ‘rethink their longevity’

‘The current environment is challenging’

Yet much of this fear is overblown, Keener said.

“Both investment returns and rates of inflation are typically compounded at a set rate, but the reality of the world is that there is a lot of year-over-year variability in both,” Kenner said. “Although the current environment is challenging for both investment returns and inflation rates, we should not use outlier data as the new base case for assumptions.”

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